Farmers' & Merchants' Bank of Reedsville v. Kingwood Nat. Bank
| Decision Date | 20 January 1920 |
| Citation | 101 S.E. 734,85 W.Va. 371 |
| Parties | FARMERS' & MERCHANTS' BANK OF REEDSVILLE v. KINGWOOD NAT. BANK. |
| Court | West Virginia Supreme Court |
Submitted January 14, 1920.
Syllabus by the Court.
The common-law defect in pleading known as duplicity is not now a valid ground of demurrer in this state; it being one of mere form, constituting ground of special demurrer, and that kind of demurrer having been abolished by statute.
Counts in a declaration purporting to charge a national bank upon a guaranty of notes of a third person, and being uncertain and indefinite as to whether the bank acted as the mere agent of the parties to the notes or was the owner thereof or otherwise beneficially interested therein, are insufficient.
An agreement of a national bank to guarantee an obligation of another person for his sole benefit, though founded upon a valuable consideration, is ultra vires, and does not bind the bank, unless the circumstances are such as work an estoppel.
Neglect of a bank to demand payment of notes intrusted to it for collection, and bind the indorsers by protest and notice does not make it liable for the notes, as if it were surety guarantor, maker, or indorser, but only for such damages as have been sustained by the holder by reason of such negligence; and, to make out a case against the bank in his declaration, he must allege such additional facts as will show that he has been so injured and damaged.
By virtue of sections 63 and 64 of chapter 98a, Code 1913 (secs 4234, 4235), the Negotiable Instruments Law, a person not otherwise a party to a note, placing his signature thereon in blank before delivery, is liable thereon only as an indorser.
A statute covering an entire subject, and showing by its terms and provisions legislative intention to deal with it fully and comprehensively, is deemed to have been intended to be a substitute for all previously existing law applicable to such subject, and is therefore construed as having impliedly repealed such law, whether common or statutory, in so far as it is inconsistent with the terms of the statute.
A declaration founded upon failure of a bank to protest negotiable paper intrusted to it for collection need not negative the existence of facts or circumstances excusing such failure.
Certified Question from Circuit Court, Preston County.
Action by the Farmers' & Merchants' Bank of Reedsville against the Kingwood National Bank. Demurrer to declaration overruled, and question certified. Affirmed in part, and reversed in part.
Wm. S John, of Morgantown, and A. G. Hughes, of Kingwood, for plaintiff.
F. E. Parrack, of Tunnelton, for defendant.
Having overruled a demurrer to the plaintiff's declaration purporting to charge the defendant with the amounts of two promissory notes, on the ground of guaranty of payment thereof and neglect to effect collection of them or fix liability upon the endorsers, by presentment, demand of payment, protest and notice, and to each of its several counts, the circuit court of Preston county has certified to this court its decision thereon for review.
The common counts, treated as one, are in the usual form, and, as to them, the demurrer was properly overruled. They do not become immaterial by reason of the insertion of special counts indicative of reliance upon causes of action not embraced in them.
Although the first and second special counts both allege two grounds of action, breach of the alleged guaranty and negligence, and would be subject to the common law infirmity of duplicity, for that reason, that defect will not sustain the demurrer. Duplicity is a merely formal defect, constituting ground of special demurrer at common law, and, as the special demurrer has been abolished by statute in this state, there is no form of demurrer by which these counts can be attacked on the ground of duplicity. Code, c. 125, § 29 (sec. 4783); Coyle v. B. & O. Railway Co., 11 W.Va. 94; Sweeney v. Baker, 13 W.Va. 158, 201, 31 Am.Rep. 757; Poling v. Maddox, 41 W.Va. 779, 786, 24 S.E. 999. In point of form, the first and second special counts are single, but in reality and substance each of them constitutes two counts, for each of them alleges two distinct causes of action. Formally, they constitute two counts; actually, they embrace four. If they were not such as can be combined in one declaration, there would be a misjoinder of actions. Sweeney v. Baker, cited; Creel v. Brown, 1 Rob. 265; Southern Express Co. v. McVeigh, 20 Grat. 264; Harvey v. Skipwith, 16 Grat. 393; Gary v. Abingdon Publishing Co., 94 Va. 775, 27 S.E. 595; Booker v. Donohoe, 95 Va. 361, 28 S.E. 584. As they both arise out of contract, they can be joined. An observation in White v. Romans, 29 W.Va. 571, 575, 3 S.E. 14, respecting the effect of mere duplicity, is inconsistent with the conclusion here announced; but both reason and the weight of authority in this state and elsewhere sustain the conclusion.
As to the guaranty relied upon, the allegations in the two counts are clearly insufficient by reason of their uncertainty and indefiniteness, if, indeed, they do not state a case upon which no action can stand, when properly interpreted. The terms can easily be read as making the defendant a mere agent of a third party for the purpose of negotiating the notes to the plaintiff, and taking custody of the proceeds thereof, and turning them over to the principal. Each count says the Lewis Lumber Company executed its two notes for $1,200 each, payable to its own order, and, after having obtained the indorsements of F. K. Paxton and T. W. Lewis thereon, delivered them to the defendant, a national bank, for the purpose of having them negotiated by the defendant and discounted, and that the defendant, for a valuable consideration, by a certain writing signed by its cashier on its behalf and directed to the plaintiff, forwarded the notes to the latter, and by said writing guaranteed their payment, in consideration of acceptance thereof by the plaintiff and its discounting the same and placing the proceeds to the credit of the defendant. There is no allegation of ownership of the notes by the defendant, its indorsement thereof nor its receipt of the benefit of the transaction. If the declaration correctly narrates the manner in which the notes came into the hands of the plaintiff, there was nothing on the face of the papers nor in the circumstances, indicative of ownership thereof by the defendant or intention on its part to make sale of them or indorse or rediscount them. They did not appear to have been owned or discounted by it, and the letter purporting a guaranty of payment indicated lack of such ownership and lack of intent to sell or rediscount the notes, for such a sale is ordinarily effected by indorsement and delivery of the paper, making a guaranty of payment unnecessary. If the defendant was the agent of the Lewis Lumber Company in the disposition of the notes and collection of the proceeds, it had no such interest in the paper as would legally justify or sustain the guaranty, as will be demonstrated by authority.
The allegation that the notes were discounted, and the proceeds thereof placed to the credit of the defendant on the books of the plaintiff, is not necessarily inconsistent with the theory of agency. At most, this fact is a mere circumstance tending to prove the defendant's ownership of the notes or the proceeds thereof. The defendant's mere direction to the plaintiff to place the proceeds of the notes to its credit, and compliance with the request, did not amount to a misappropriation of the notes or their proceeds by the defendant, if it was the agent of the Lewis Lumber Company. That transaction amounted to no more than a convenient means of effecting the purpose of the agency, procurement of the proceeds of the notes for the Lewis Lumber Company. The only additional allegation that can be deemed to be inconsistent with the theory of agency, revealed and sustained by the facts narrated, is that the defendant, in the letter of guaranty, requested the plaintiff to discount the notes "for the defendant," and that the plaintiff confiding in the promise and undertaking of the defendant to guarantee payment, accepted and discounted them for the defendant. This inconsistency, however, falls far short of the averment of the defendant's ownership, or its reception of the benefit of the transaction, constituting a legal basis for its guaranty of payment. In neither of the two counts is there a clear, definite allegation of the capacity in which the defendant acted, or its relation to the notes. If, in either of the two capacities indicated, the defendant could have...
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